OREANDA-NEWS. May 19, 2008. Current account balance. In March 2008, the deficit in the current account of the country’s balance of payments was LTL 1,4 million, showing an increase of 72,1 percent compared to February, and an increase of 81 per cent compared to March 2007, reported the press-centre of Bank of Lithuania.

A rise in foreign trade deficit by LTL 520,5 million and a rise in the income balance deficit by LTL 110,1 million contributed to the increase of CAD.

In January-March 2008, CAD amounted to LTL 3,6 billion and was 28,8 percent above the figure for corresponding period in 2007. According to preliminary estimate, in Q1 2008 CAD accounted for 15 percent of GDP, while four-quarter CAD (starting with Q2 2007) made up 13,9 percent of GDP.

According to the data of the Department of Statistics under the Government of the Republic of Lithuania, in March 2008, export of goods increased by 7,7 percent and import of goods went up by 14 percent month on month, while the year-on-year increase made up 27,1 and 35,1 percent, respectively.

In January-March 2008, annual growth of export and import of goods respectively was 30,8 and 29,9 percent. In January-March 2008, export of goods to the EU Member States accounted for 62,7 percent of the Lithuanian export of goods, while import of goods accounted for 58,9 percent. Export of goods to the CIS countries accounted for 22,5 percent and import of goods from these countries accounted for 32,9 percent.

The growth of the export of goods during this period was mainly driven by an increase in the export of mineral products (2,5 times), fertilisers (64,8%), and grain (11,7 times). The growth of import was driven by an increase in import of mineral products (2,2 times), ground vehicles (14,5%) and chemical industry output (22,2%).

In January-March 2008, the main Lithuania’s export partners were Russia (15%), Latvia (11,6%), Germany (8%), and Denmark (6.3%), while the main import partners were Russia (29%), Germany (12.1%), Poland (9.6%), and Latvia (5,4%).

In the first three months of 2008, the top positions on the list of the export of goods were occupied by mineral products (23,3%), machinery, mechanical and electrical equipment (10,8%), output of chemical industries and related industries (9,1%), while top positions on the list of the import of goods were occupied by mineral products (27,4%), machinery, mechanical and electrical equipment (14,4%), vehicles and associated transport equipment (13,9%).

Compared to February 2008, in March export of services increased by 4,9 percent, while import of services went up by 1,6 percent; consequently the total surplus of the positive balance of services increased by LTL 28,5 million or 14,6 percent. In January-March 2008, compared to the same period in 2007, export of services increased by 11,1 percent and import of services grew by 5,4 per cent, while the total surplus of positive balance of services went up by 33 percent.

In March 2008, payments to non-residents (on their investment in Lithuania) made up LTL 527,1 million, while the income of domestic economic entities on investment abroad made up LTL 145,5 million.

In March, the deficit in the balance of investment income formed LTL 381,6 million, an increase of 46,1 percent month on month and an increase of 6,1 percent year on year. In March 2008, the balance of compensation of employees was positive, while gross deficit of income balance made up LTL 368,5 million (in February 2008 it was LTL 258,5 million, while in March 2007 it equaled to LTL 393,1).

In Q1 2008, gross income balance deficit was LTL 867,4 million, an increase of 10,5 percent year on year.

In March 2008, the surplus in the balance of current transfers amounted to LTL 373,3 million (in February 2008, it was LTL 353,1 million, while in March 2007 it equalled to LTL 399,2 million). In January-March 2008, this surplus made up LTL 744,5 million (LTL 762,8 million in January-March 2007).

In the first three months of 2008, the year-on year increase in transfers from the EU support funds was 10,1 percent, while remittances by individuals went up by 25,1 percent. The Lithuanian contributions to the EU budget however increased 41,8 percent, while remittances of private individuals from Lithuania went up by 23,8 percent. The growth of contributions to the EU budget and individual remittances from Lithuania contributed to the gross decrease in the surplus of the current transfers.

Capital and financial account balance. In March 2008, gross outflow of other investments by domestic economic entities, excluding official reserve assets, amounted to LTL 1,5 billion, while gross inflow of foreign investments in Lithuania was LTL 1,9 billion; eventually the net flow of total investments (taking into account investment outflows/inflows) was positive at LTL 374,9 million. In January-March, gross outflow of investments equalled to LTL 964 million, while gross inflow of foreign investments in Lithuania made up LTL 1,2 billion.

In March, non-repayable capital transfers made up LTL 457,3 million (LTL 891,5 million in January-March 2008).

In March 2008, foreign direct investment inflow in Lithuania reached LTL 336,8 million. Taking into account a decrease of foreign direct investment by domestic economic entities abroad, net foreign direct investment flow made up LTL 416,9 million in March, a month-on-month increase of LTL 225 million. In January-March 2008, foreign direct investment flow in Lithuania was LTL 716,3 million, a decrease of 42,5 per cent year on year.

In March 2008, net portfolio investment flow was negative (-) at LTL 138,3 million. This was mostly influenced by the investment portfolio flow abroad.

In March 2008, the net flow of other investments and financial derivatives was positive at LTL 96,4 million. In January-March 2008, the net flow of this type of investments made up LTL 122 million, a decrease of LTL 2,2 billion compared to January-March 2007. A decrease in the flow of this type of investments was mainly driven by decrease in liabilities of the domestic MFIs and the Bank of Lithuania.

At the end of March 2008, official reserve assets made up LTL 15,7 billion (EUR 4,5 billion or USD 7,2 billion). In March, they contracted by LTL 464,9 million or by 2,9 percent.

The narrowing of reserve assets was driven by the decrease in external liabilities of the Bank of Lithuania and deposits of other MFIs with the Bank of Lithuania respectively by LTL 201,2 million and LTL 133,6 million. Official reserve assets were also pushed down by other factors and central government deposits with the Bank of Lithuania, which respectively contracted by LTL 85,4 million and LTL 79,8 million.

The decrease in official reserve assets was partially offset by an increase of LTL 35,1 million in currency in circulation.